This is a graph of the current Top 16 Exporters versus the original data I came up with for each month. These are not revisions from last month - in other words, if I do this in December 2008 I will be measuring the difference between those figures and the first data presented for November 2007 (here).

The economies of many big oil-exporting countries are growing so fast that their need for energy within their borders is crimping how much they can sell abroad, adding new strains to the global oil market.

Experts say the sharp growth, if it continues, means several of the world’s most important suppliers may need to start importing oil within a decade to power all the new cars, houses and businesses they are buying and creating with their oil wealth.

Indonesia has already made this flip. By some projections, the same thing could happen within five years to Mexico, the No. 2 source of foreign oil for the United States, and soon after that to Iran, the world’s fourth-largest exporter. In some cases, the governments of these countries subsidize gasoline heavily for their citizens, selling it for as little as 7 cents a gallon, a practice that industry experts say fosters wasteful habits.

“It is a very serious threat that a lot of major exporters that we count on today for international oil supply are no longer going to be net exporters any more in 5 to 10 years,” said Amy Myers Jaffe, an oil analyst at Rice University.

Rising internal demand may offset 40 percent of the increase in Saudi oil production between now and 2010, while more than half the projected decline in Iranian exports will be caused by internal consumption, said a recent report by CIBC World Markets.

The report said “soaring internal rates of oil consumption” in Russia, in Mexico and in member states of the Organization of the Petroleum Exporting Countries would reduce crude exports as much as 2.5 million barrels a day by the end of the decade.

That is about 3 percent of global oil demand. It may not sound high, but experts say demand for oil is so inflexible, and the world has so little spare production capacity, that even small shortfalls can raise prices. In 2002, when a labor strike in Venezuela took 3 percent of global production off line, oil prices spiked 26 percent within weeks.

The trend, though increasingly important, does not necessarily mean there will be oil shortages. More likely, experts say, it will mean big market shifts, with the number of exporting countries shrinking and unconventional sources like Canadian tar sands becoming more important, especially for the United States. And there is likely to be more pressure to open areas now closed to oil production.

Greater political stability and increased drilling in some important oil states, notably Iraq, Iran and Venezuela, could help offset the rising demand from other oil exporters.

“Ten years from now, world capacity to produce oil could be 20 percent higher than today,” said Daniel Yergin, chairman of Cambridge Energy Research Associates. “But a lot will depend on how the geopolitics work out.”

Growth in demand among oil exporters is one aspect of a larger issue, breakneck economic growth in parts of the developing world. China and India are expected to account for much of the increase in global oil demand in the next 20 years. But Fatih Birol, chief economist at the International Energy Agency in Paris, rated consumption growth among oil exporters as the second-biggest threat to meeting the world’s oil needs.

“It’s a big problem, and growing all the time,” Mr. Birol said.

Internal oil consumption by the five biggest oil exporters — Saudi Arabia, Russia, Norway, Iran and the United Arab Emirates — grew 5.9 percent in 2006 over 2005, according to government data. Exports declined more than 3 percent. By contrast, oil demand is essentially flat in the United States.

CIBC’s demand projections suggest that for many oil countries, including Saudi Arabia, Kuwait and Libya, internal oil demand will double in a decade.

Factors contributing to the trend include increased industrialization, higher government spending and increasing personal consumption. According to a World Bank report, economic growth in the Middle East and North Africa has doubled since the 1990s, and Russia has done even better.

Oil money is giving many countries the means to invest in their own economic development, and robust global growth is creating markets for their goods — including plastics, chemicals and fuels refined from oil.

To be sure, many oil-exporting states have a long way to go before they achieve Western living standards. The global oil market is still dominated by traditional consumers, particularly the United States, which uses nearly a quarter of the world’s oil.

Perhaps surprisingly, though, some producing countries have surpassed the United States in oil consumption per person. They include Bahrain, Kuwait, Qatar and the United Arab Emirates.

Particularly in oil-producing countries with large populations, like Indonesia, Russia and Mexico, a rapid rise in car ownership is a big factor driving consumption increases. Russian farmers are replacing horses and carts with gas-guzzling four-wheel-drive vehicles, while urban consumers are snapping up BMWs even before they learn to drive.

“Most of the producing countries have young populations entering the driving age and can more readily afford to buy cars because the price of fuel is low,” said Charles McPherson, an oil expert at the International Monetary Fund. “It’s certainly pulling product off the international markets.”

Some oil-exporting countries use price controls and subsidies to ensure cheap fuel for their people. These programs are politically popular, even though experts say they contribute to wasteful energy use.

Kuwaitis, for instance, often leave their air conditioning — powered by electricity generated from natural gas or oil-derived fuels — running for weeks while on vacation, said an official at the World Bank. Sportsmen of the United Arab Emirates ski indoors on manufactured snow and play golf on lush courses that require desalinated water produced with fuels refined from oil.

Saudis, Iranians and Iraqis pay 30 to 50 cents a gallon for gasoline. Venezuelans pay 7 cents, and demand is projected to rise as much as 10 percent this year. Auto sales have tripled in four years. “Where cheap oil is viewed as a national human right, you’ve virtually got runaway demand,” said Chris B. Newton, an executive of the Indonesian Petroleum Association in Jakarta.

Indonesia flipped from exporting oil to importing it three years ago because of sagging production in depleted fields and rising demand. Iran, Algeria and Malaysia are vulnerable in the next decade. Most oil experts view Mexico as the next country likely to flip, in as little as five years.

Rapidly falling production in Mexico’s aging Cantarell oil field is part of the problem. Also significant, though, is the rising number of cars on Mexican roads. They have nearly doubled, to almost 16 million, in the last decade, and gasoline consumption is growing 5 percent a year.

In Mexico City the other day, a bricklayer named Jaime Guerrero arrived at a local Chevrolet dealership. His extended family cried “bravo!” as he signed the papers for his first car.

“To have a new car in my name is a dream transformed into reality,” said Mr. Guerrero, 26. He and his family piled in and weaved through the chaotic traffic of the capital, hunting for a priest to douse the car with holy water.

“I don’t worry about the climate or shortages of oil in the world,” Mr. Guerrero said. “I just worry if gasoline prices go up.”

Tuesday, November 13, 2007

I have arbitrarily increased Venezuela's domestic consumption for 2007 from about 580,000 bpd to 650,000 bpd based on two articles I read recently.

Oil is now used to create electricity. Some of Venezuela’s electric plants used to burn natural gas, but gas production has dropped, creating shortages that oil is filling. Domestic consumption of oil has reached at least 650,000 barrels a day, according to Venezuelan economists. Venezuela is importing oil products and may soon have to import gasoline. There is also the problem of contraband: subsidized gasoline smuggled out and sold at world-market prices in Colombia and the Caribbean. Between its domestic consumption and its use of oil to make friends overseas, Venezuela gives away or subsidizes a third of its production. Most of the rest is sold in the United States.

The numbers for Norway's production for the last three months are a bit sketchy. I'm using the EIA's from their Short Term Energy Outlook(STEO, Nov. 6th) . These differ from the IEA's numbers in their direction and size the last couple of months. Hopefully these will iron themselves out in the next few months with revisions. I am not including NGPL's for Norway and I probably should be. I'll add these next month (about 300 kbpd).

In response to comments about the percentage of total exports that these 16 countries represent: about 90%. The Top 20 would be 93%, Top 24 - 96%. I have plans to add four more countries now that the EIA has begun publishing more up-to-date numbers for the countries in question (Ecuador, Oman, Equatorial Guinea, and Azerbaijan) and Ecuador has rejoined OPEC. Probably the beginning of next year.

Monday, October 15, 2007

Thursday, October 11, 2007

Russia – July actual, August provisional: Russian projections are also held steady, with total oil production in 2007 of 9.92 mb/d and 10.10 mb/d in 2008 representing growth of 2.5% and 1.8% respectively. Growth this year has slowed from 1Q levels near 400 kb/d, although inflated early-2007 growth levels need to be seen in the context of weak 1Q06 production due to weather. That said, August growth stood at a more modest 125 kb/d year-on-year. Recent months have seen production drift lower from Lukoil, Gazpromneft (formerly Sibneft), TNK-BP and Gazprom, partly offset by Rosneft increases.

Yearly growth by Rosneft currently stands close to 600 kb/d, with total production of 2.2 mb/d representing a five-fold increase on 2004 levels. Some commentators have suggested that organic production growth has been sacrificed to a programme of acquisitions that has reportedly pushed Rosneft debt to around $30 billion. This is seen as potentially undermining Rosneft’s ability to finance future development at fields such as Vankor, Sakhalin and Verknechonskoye, which helped underpin MTOMR projections for Russian output reaching 10.6 mb/d by end-decade. A further twist in the tale emerged from press reports in August suggesting that the government is planning to establish a new state producer incorporating the oil assets of Rosneft, Gazprom and Surgutneftegaz. Surgutneftegaz’s inclusion may in part reflect its cash-rich status, which in turn might help alleviate Rosneft debts.

Azerbaijan – July actual: Azeri oil production remains on track for growth of around 200 kb/d both this year and next. Prevailing output of some 950 kb/d could dip to 650 kb/d in September owing to construction work on the Central Azeri platform, part of the 700 kb/d offshore ACG complex. Work should largely be completed by October however, based on higher expected shipments via the Baku- Tbilisi- Ceyhan (BTC) pipeline. Total Azerbaijan production attains 1.1 mb/d in the second half of 2008, with increased contributions from the Azeri field and from start-up at the deep Guneshli complex. Growth will be dependent however, on maintaining the integrity of the BTC pipeline, after a Kurdish rebel group said BTC would be attacked unless Turkey desists from attacks on Kurdish rebel forces.

According to preliminary data, FSU net oil exports totalled 8.89 mb/d in July, up 70 kb/d from June and 520 kb/d higher than July 2006. A 150 kb/d month-on-month increase in seaborne crude exports, including an extra 90 kb/d leaving Baltic ports, was tempered by another drop in Druzhba transits, this time by 50 kb/d (see Refining section, page 44). There are reports of Lukoil having curbed June-July deliveries to German refineries, in part due to pricing issues. However, latest information suggests reinstatedvolumes for September. Average monthly FSU product exports fell by 20 kb/d in July.

August loading schedules suggest that exports via Transneft may have been 100 kb/d below July volumes, coinciding with an increase in Russian export duties from 1 August. However, higher BTC flows may have restricted any drop in aggregate FSU supplies to around 50 kb/d. Further declines in FSU exports are anticipated later this year. The threat from late-August of a strike by Turkish ship pilots, if realised, may hinder traffic through the Turkish straits which could restrict trade flows from FSU ports in the Black Sea. Maintenance is due to reduce Caspian output by up to 300 kb/d in September, which should overshadow extra Russian barrels exported before the next rise in crude and product export duties, effective 1 October.

Sunday, September 16, 2007

Norway, the world's fifth-largest oil exporter, said crude production in August decreased 7.3 percent from a month earlier.

Output averaged 2.111 million barrels a day, compared with 2.277 million barrels a day in July, according to a statement posted today on the Web site of the Norwegian Petroleum Directorate, which oversees the nation's oil industry. The figures for August are preliminary.

Norway pumped about 319,000 barrels a day of condensate and natural-gas liquids in August, the directorate estimated. That compares with 329,000 barrels a day the month before.

Friday, August 24, 2007

Russia – June actual, July provisional: Production data for June and July continued to show Russianoutput running around 2% ahead of 2006, averaging 9.9 mb/d. For July, Rosneft production, and thatfrom the seasonal Sakhalin 2 project, came in ahead of this report’s earlier expectations. However, thiswas offset by weaker than anticipated output from Lukoil, TNK-BP and Tatneft, leading to a 20 kb/ddownward reduction in the Russian production forecast for 3Q07 onwards. Moreover, stronger Rosneftperformance results in part from its now almost-complete takeover of former Yukos production assets.Either Rosneft or Gazprom are seen by most commentators as eventual owners of producer Russneft’sassets (300 kb/d) after owner Mikhail Gutseriyev’s end-July decision to sell up.

Russian growth in 2007 now comes in at 2.3% (+225 kb/d), followed by 1.8% (+175 kb/d) in 2008. Recentreports suggest that year-round Sakhalin 2 crude production could be attained earlier than this report’sassumption of end-2008. Also, Gazpromneft (formerly Sibneft) announced it will boost spending by 66%in 2007 in order to raise output. In both instances, this report retains a more cautious outlook until signsemerge that the higher targets are close to being reached. The economy ministry’s latest long-termproduction forecast sees output stable at 10.6 mb/d in 2015-2020. Our own MTOMR last month projected Russian output of 10.6 mb/d for 2010/2011 and 10.5 mb/d in 2012, potentially rising further by mid-decade.

Kazakhstan – June actual: June production (crude and condensate) came in 110 kb/d below earlier estimates, largely due to maintenance at the Tengiz field. This report had earlier assumed 3Q maintenance, so a 30 kb/d downward revision for 2Q07 is offset by a similar upward revision for 3Q, leaving the 2007 forecast largely unchanged at 1.36 mb/d. Production rises further in 2008 to 1.45 mb/d.

Further gains from Kazakhstan longer-term centre on the triumvirate of fields consisting of the existing Tengiz and Karachaganak and the currently underdevelopment Kashagan. Early August is due to see the government opening talks with Kashagan partners to renegotiate the field’s production sharing agreement, after delays have successively pushed back start-up from an original 2005 to a latest estimate of late 2010 (see MTOMR, July 2007, p38). Meanwhile, in early July, Karachaganak Petroleum Operating (KPO) BV awarded a front-end engineering and design (FEED) contract for phase three of the Karachaganak processing complex. This will substantially add to liquids production of 290 kb/d by 2012.

FSU net oil exports in June averaged 8.8 mb/d, some 270 kb/d lower than May levels. Crude exports fell by 450 kb/d following a 28% increase in Russian crude export duties, from 1 June, to $200/tonne. This was partially offset by a 190 kb/d increase in product exports, including an extra 160 kb/d of gasoil.

June crude exports of 5.98 mb/d were at a six-month low. On top of higher Russian export duties, maintenance at Novorossiysk contributed to a 220 kb/d drop in Black Sea volumes. Moreover, 110 kb/d less crude was exported via the Baltic in June. A 100 kb/d month-on-month decrease in Druzhba volumes, and lower CPC transits after Tengiz field maintenance, saw total crude volumes via the Transneft pipeline system falling by 350 kb/d. BTC pipeline exports from Azerbaijan in June were unchanged from May.

FSU exports in July could be up to 100 kb/d higher than in June, with loading schedules showing 50 kb/d more oil coming through the Transneft system and an extra 20 kb/d via BTC. However, a further hike of 12% in Russian export duties was due on 1 August. While this is set to reduce volumes exported through Transneft by up to 100 kb/d, a partial offset will come from higher Caspian volumes via BTC.

Wednesday, August 22, 2007

Mexican state oil company Pemex expects its Chicontepec oilfield in Veracruz and Puebla states to reach peak production of 470,000 bpd in 2014, newspaper El Norte reported, citing Pemex sources.

The field produced 23,000 bpd in the first six months of 2007, but Pemex is hoping the field will ultimately help offset the natural decline of the Cantarell field, which produces roughly half Pemex's crude output.

With this goal in mind, Pemex aims to invest 164bn pesos (US$14.7bn) in Chicontepec in 2008-17, with annual investment hitting a peak of 26.2bn pesos in 2011.

The first five years of investment are expected to total 114bn pesos, with the second five years reaching 48.8bn pesos.

A consortium led by US oilfield services company Schlumberger (NYSE: SLB) won the first Chicontepec service contract in 2003, which initially featured a 200-well drilling program. Schlumberger recently signed a US$1.4bn contract for the drilling of 500 wells on the field.

Saturday, August 11, 2007

What I term Net Exports is as follows. Production minus domestic consumption. So I will tackle each in turn after a brief summary of both together. I’m using somewhat of a hybrid of what is considered “all liquids.”

I use “all liquids” because it is what I consider the better “consumption” data-set, which is BP’s. So to keep things as uniform as possible, I need an all-liquids production data-set. Unfortunately one does not exist that provides monthly numbers for the relevant countries. The IEA would be my choice, except that they break out straight crude for the OPEC countries and only provide a “total” other-liquids figure for each month. I decided to use the EIA’s monthly numbers for production and to construct my own all-liquids hybrid from the available data.

This is a monthly “attempt” – so I have to make do with the fact that all consumption numbers are yearly. I will describe that process specifically when I start to talk about how I got my monthly consumption numbers.

Let’s start with production. The EIA publishes its numbers usually in the first week of every month. They cover everything up to and including the month three months previous. This first attempt at a timely report uses the EIA’s t11 series Crude+Condensate numbers as well as the EIA’s STEO(Short Term Energy Outlook). Both were released on August 10th. The t11 series covers through May. The STEO covers June and July, but only for OPEC and only for OPEC straight crude(excluding lease condensate).

The categories. Total oil supply and hence what is consumed (implied demand or “product supplied”) is wrapped into the category “all-liquids.”

All-liquids consists of four categories, one of which is divided into two sub-categories. First, there are C+C(Crude and Condensate), NGLs (or NGPLs), “Other Liquids,” and Refinery Processing Gains(RPG).

“Other liquids” include mainly ethanol. RPG typically occurs in highly technology advanced countries, where the refineries are actually able to generate carbon-based liquids is such large volume from the process of refining that they can be fed back into the system as if they were fresh barrels of something or other. See book: “Oil on the Brain.”

The main category is of course what is considered straight crude oil. This is C+C(crude plus condensate). domestic consumption is measured in all-liquids, however.

There is another issue. Condensate while tracked together with crude for the EIA does not count for OPEC quotas. Both the EIA and IEA break it apart from the OPEC crude numbers. The best way to look at this specifically is in the case of Algeria. Outside of OPEC the reporting agencies don’t split condensate from crude.

Production – The Sixteen Countries

On the production side, the OPEC countries are by far the easiest to deal with. Of the twelve countries, all except Indonesia are represented here. Indonesia is not a net exporter, and is in decline. Whether this is geologic or due to above-ground “investment” factors is a subject for another day.

The individual production of the OPEC countries is given in the EIA STEO for June and July. Using previous months’ data from the t11 series and table12(excluding condensate) we can figure what is probable for the monthly condensate production(I calculate this separately from my spreadsheet). Adding this to the STEO figures I get C+C production for these 11 OPEC countries through July. These figures will of course be revised next month when revisions are made to the underlying data.

Next, I add NGL figures for certain countries. Of the 16 countries, NGL is tracked monthly for Saudi, Algeria, Mexico. Russia, Canada, and I think one other. For the others, it is too small to be relevant, with one exception. For Norway, I discovered this time around that they have about 270kbpd of NGL production each month and I will account for this next time.

I do not include RPG or “other liquids.” For the countries involved the volumes are too small to be significant and add too much complexity. This is one reason I call this an all-liquids hybrid.

Friday, June 29, 2007

FSU apparent demand – defined as domestic crude production minus net exports of crude and oil products – has been marginally revised upwards by 16 kb/d in 1Q07 and downwards by 19 kb/d in 2Q07. Overall, the region’s apparent demand in 2007 is virtually unchanged from last month’s report, and isexpected to average 4.0 mb/d (0.1% lower than in 2006).The region’s net exports are expected to continue to peak at close to 9.0 mb/d during 2Q07. This would be the second quarter in a row of post-Soviet highs. It should also be noted that Russian duties fell from 1 April, further boosting net exports. Duties, however, are poised to increase again on 1 June.

click on image to view larger version

Tuesday, June 19, 2007

Under the agreement, the Anglo-Persian Group and Shell each gave up the "beneficiary interest" of 2.5 percent of the total shares to the Armenian. That meant that he could not vote shares, but would enjoy all the financial benefits of such a shareholding. And so Mr. Five Percent was born, and that is how he was known ever after.

Everything seemed settled at last, even the boundary with Turkey, except for one stumbling block -- Calouste Gulbenkian and his 5 percent. Throughout the negotiations, Gulbenkian had remained a strange and solitary figure. He went to great lengths to avoid meetings, but scrutinized every word of memoranda, and replied with a torrent of telegrams. Isolation also marked his personal connections. "Oil friendships are very slippery," he once said.